Committee hearings on the development, protection, and support of small and medium-sized businesses (SMEs) were recently held in Kyiv. The event brought together Members of Parliament, government officials, the Business Ombudsman, and leading business associations. The session was organized by the Verkhovna Rada Committee on Economic Development in cooperation with the Ukrainian Business Council and the Center for International Private Enterprise (CIPE).
Key participants included MP Serhiy Taruta, representatives of various parliamentary committees, the business community, and Ihor Marchuk, Chair of the Subcommittee on State-Business Interaction and Investment. The Fuel and Energy Business Association (FEBA) participated as a representative of an industry currently facing the acute consequences of shifting tax and regulatory policies.
Tax Policy as a Driver of Market Deformation
The central theme of the discussion was the urgent need to balance the tax burden on SMEs amidst wartime challenges and budget deficits. For the fuel market, these issues are critical.
FEBA consistently highlights: Current fiscal approaches—specifically the mechanism of advance corporate income tax payments—place a disproportionate burden on small and medium-sized gas station segments. This is already leading to a decrease in the number of independent operators and a decline in market competition.
State and Business: Seeking a Balance
Participants agreed that while the state must find resources to fill the budget, these decisions should not destroy the entrepreneurial environment. Key insights from the hearings included:
- Serhiy Taruta: “Small and medium-sized business is not just a segment of the economy; it is its foundation. Without it, it is impossible to speak of resilience, competition, or national development.”
- Ihor Marchuk: “Entrepreneurs are working under extreme conditions today. Regulatory decisions must account for this reality. The state’s task is not to complicate, but to create conditions for business survival and growth.”
- Business Ombudsman Institution: “Systemic and predictable rules of the game are the key to business trust in the state. Without this, neither de-shadowing nor economic growth is possible.”
Additional priorities identified:
- Involving the business community in the formation of legislative solutions.
- Avoiding abrupt changes to the tax system during the war.
- Mitigating the risks of business moving into the “shadow economy” due to ill-conceived fiscal steps.
Why This is Critical for the Fuel Market
For the retail fuel sector, these discussed policies have direct consequences:
- Unequal Pressure: “One-size-fits-all” rules for different scales of business intensify the pressure on small gas stations.
- Weakened Competition: The shrinking of the independent segment weakens price competition.
- Market Concentration: The market is gradually moving toward concentration, which inevitably impacts the final price for consumers.
FEBA emphasizes: It is specifically small and medium-sized businesses that ensure fuel accessibility in regional areas, particularly in remote and frontline communities.
The Path Forward
The discussion resulted in a shared understanding that tax policy must account for the real economic conditions of business operations to avoid systemic market imbalances. For the fuel industry, this necessitates:
- A revision of fiscal burden approaches.
- Differentiation of conditions for various categories of business.
- Ensuring fair competition as the foundation of a stable market.
Following the hearings, a set of formal recommendations will be prepared for state authorities. FEBA will continue to work on forming a consolidated market position and promoting solutions aimed at preserving competition and the sustainable development of the fuel sector.
